Sovereign and pension funds from Russia, Singapore, the U.K. and the UAE are among those to express interest in the Rs. 40,000-crore National Investment and Infrastructure Fund, Union Finance Minister Arun Jaitley said.

The government will invest Rs. 20,000 crore in the Fund that will build greenfield and brownfield projects and revive stalled projects. The remaining Rs. 20,000 crore is expected to come from private investors. The government’s share in the corpus will not exceed 49 per cent. The Governing Council of the Fund has decided to complete by January-end the selection process of the Chief Executive of the investment management company responsible for taking investment decisions of its corpus, Mr. Jaitley said.

Review in March

Mr. Jaitley, who is the chairman of the Council, said it will meet again in March to review the progress in the participation of the sovereign funds that are willing to invest. The Council also took up possible projects that may be taken up under the Fund, he said. The registration process, under regulations of the Fund, has been completed, including the process that includes markets regulator, SEBI, as a Category II Alternative Investment Fund.

The government’s share in the

Fund’s corpus

will not exceed

49 per cent

From March 2015 Hindu

Well-developed infrastructure is a fundamental underpinning of any effort to push the economy into a growth orbit. This requirement has assumed a critical dimension for the BJP government’s larger political agenda. Prime Minister Narendra Modi’s ‘Make in India’ pitch has ignited a wave of optimism. Its success, however, hinges largely on dismantling ground-level hurdles. A sense of unease was discernible when Finance Minister Arun Jaitley spoke, while presenting Budget 2015, of inadequate infrastructure and major slippages in projects. “Our infrastructure does not match our growth ambitions,” he admitted. He evidently realises that stepped-up allocation by itself would not be enough. He has promised to introduce a plug-and-play model for big-ticket infrastructure projects such as power plants, airports and roads. The proposal to revisit the PPP (public private partnership) mode of infrastructure development is welcome and inevitable. Assorted non-economic risks — from political to social — have inhibited investment in this space. The toll model for roads is a case in point: ‘toll-risk’ is proving to be a dampener for the flow of fresh private funds into the sector. The changing dynamics call for a new approach. “The sovereign will have to bear a major part of the risk without, of course, absorbing it entirely,” Mr. Jaitley had said. Economic Survey 2014-15also speaks of “disproportionately high levels of default’’ facing the road sector portfolio owing to the economic downturn. The Survey clearly sees a slowdown in appetite for BOT (build operate and transfer) PPP projects as a consequence. The PPP model was the centrepiece of the growth story a decade ago but it has outlived its utility. The proposed Public Contracts (Resolution of Disputes) Bill and the Regulatory Reform Bill will, it is to be hoped, help get stalled projects back on track. The plan for a bankruptcy code must be read in tandem with these two proposals. All these should provide a higher level of comfort to lenders for infrastructure projects.

The Budget has also proposed a National Investment and Infrastructure Fund with an annual inflow of Rs.20,000 crore. This could strengthen the balance sheet of infrastructure finance companies such as the NHB and the IRFC, and help them improve their leveraging power and refinancing capacity. This will have a trigger effect down the line. Simultaneously, Mr. Jaitley has planned tax-free infrastructure bonds for projects in the rail, road and irrigation sectors. The Budget has also proposed five ultra-mega power projects. With the plug-and-play model, one hopes that the winners of the contracts could begin the project implementation process immediately without worrying about regulatory clearances and coal or gas linkages. Mr. Jaitley has pressed the right buttons. Whether these initiatives take off depends on how potential investors respond.